New Delhi: Coal India Limited (CIL) has approved a significant equity investment of ₹3,189.54 crore in its subsidiary, Bharat Coal Gasification and Chemicals Limited (BCGCL), as part of its plan to establish a Coal-to-Ammonium Nitrate project. The project aims to reduce India’s import dependence on explosives for mining operations.
The BCGCL joint venture, incorporated in May 2024, is co-owned by CIL (51%) and BHEL (49%). The company is currently in the pre-implementation stage, with a planned production capacity of 0.66 million metric tonnes per annum (MMTPA) of ammonium nitrate. The total project implementation period is estimated at 48 months.
Strategic Significance
-
The investment aligns with CIL’s strategy to expand into surface coal gasification and chemical production, complementing its core coal mining business.
-
By producing ammonium nitrate domestically, CIL aims to secure a steady supply of explosives for its operations and reduce reliance on imports.
-
The equity infusion will be made at face value, through a subscription to shares by promoter companies, maintaining the joint venture structure.
Investor Perspective
Analysts view this move as a long-term growth initiative:
-
With the project under the umbrella of CIL, investors can expect enhanced strategic control over critical mining inputs.
-
Although the project is in its early stages, successful implementation could improve cost efficiency and supply security for CIL’s vast coal operations.
-
The ₹3,190 crore investment is substantial but expected to support future operational scale-up and revenue stability.
Background
BCGCL is part of India’s push toward indigenization of mining-related chemicals. With CIL holding a majority stake, the project underscores the company’s commitment to forward integration and supply chain security in the mining sector.
The project is expected to be completed over the next four years, after which production of ammonium nitrate will commence, catering primarily to CIL’s internal requirements.